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PointsBet share price jumps 7% after announcing new U.S. partnership

We examine the details behind PointsBet’s latest U.S. partnership as well as take a brief glance at some of the company’s key financial metrics from FY19.

The partnership at a glance

PointsBet (ASX: PBH) – a digitally-focused corporate bookmaker with operations in the US and Australia today announced that its US-based subsidiary – PointsBet Michigan LLC – had entered into an agreement with Lac Vieux Desert Public Enterprise and Finance Commission (LVD) 'to provide online and mobile sports wagering and gaming (casino) in the State of Michigan.'

Though it was pointed out that the company providing these services is contingent upon PBH obtaining the relevant licensing, the market seemed unconcerned by such details, bidding the PointsBet share price as much as 7.67% higher – to $5.33 per share by the close of trade.

Speaking of this freshly minted partnership, the PointsBet CEO, Sam Swanell said:

'Pointsbet is pleased to have reached agreement for both online sportsbook and online casino operations with such a forward-thinking Tribe, and we look forward to many years of great success working together in Michigan.'

As a cornerstone of this partnership, PointsBet and LVD will join forces to offer digital sports wagering services through PBH’s mobile and desktop platforms. In addition to this, this partnership will facilitate the launch of a PointsBet and LVD branded digital casino – based in Michigan.

As noted above, such offerings are contingent upon the company receiving the required regulatory licenses.

Looking at the economics behind this partnership, it was further pointed out that:

'PointsBet will pay to LVD online sportsbook and online gaming market access fees as well as a portion of the Net Gaming Revenues derived from the online sportsbook and online gaming operations.'

The initial term of the PointsBet-LVD agreement is 20 years.

Pointsbet share price: fundamentals in focus

Ultimately, this partnership caps off a successful 12-month period for PointsBet, with the company’s stock more than doubling since listing on the ASX in June 2019.

A glance at some of PointsBet’s key financial metrics potentially explains this recent bullishness around the stock.

On the user front, the company saw first time bettors (users) rise a 118% – from 17,239 (2H FY18) to 37,612 (2H FY19). In step with those figures, turnover has risen even more significantly, climbing 196% – from $120.8m (2H FY18) to $357.5m (2H FY19).

Looking at the company’s statutory financial results for FY19 we also see strong triple-digit growth, with company revenue up 173% – to $25.6m in FY19. In saying that, the company remains loss making as it pursues an aggressive growth agenda, reporting a loss of $41.9m (or 72.1 cents per share) in FY19.

The PointsBet share price finished out Monday’s session at $5.33 per share, on a market cap of $754.88m.

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